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Obama Ignores Jobs Council Recommendation, Rejects Keystone XL
Posted By:  - 01/18/12

Shot: Yesterday, Obama’s Council on Jobs and Competitiveness released a report calling for an “all-in” approach to energy.

“Continuing to deliver inexpensive and reliable energy is going to require the United States to optimize all of its natural resources and obstruct pathways (pipelines, transmission and distribution) to deliver electricity and fuel. The Council recognizes the important safety and environmental concerns surrounding these types of projects, but now more than ever, the jobs and economic energy security benefits of these energy projects require us to tackle the issues head-on and to expeditiously, though cautiously, move forward on projects that can support hundreds of thousands of jobs.”

Chaser: From today’s Washington Post:

“The Obama administration today formally rejected a bid by Canadian energy company TransCanada to build a $7 billion oil pipeline linking the tar sands of Alberta to refineries in the Gulf of Mexico.”

Hangover: In a statement President Obama said that the Congressionally-imposed deadline for review of the Keystone XL pipeline did not allow the State Department to finish a “full assessment of the pipeline’s impact.” This ignores the fact that the project has already undergone tremendous amounts of regulatory scrutiny including three years of review conducted by ten federal agencies. And thus far the Keystone XL has passed every test with flying colors.

The State Department’s Supplemental Draft Environmental Impact Statement (the second round of reviews) even found that, “from a global perspective, the project is not likely to result in incremental greenhouse gas emissions.” Even going so far as to say that the “proposed project would have a degree of safety over any other typically constructed domestic oil pipeline system.”

So it’s not the environment that Washington is endangering, it’s a secure source of energy and jobs. According to a study by the Perryman Group, over the life of the project it would lead to $20.9 billion in spending, $9.605 billion in increased output, and 118,935 person-years of employment! That’s tens of thousands of U.S. jobs that our recovery could desperately use.  

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New Study Reveals the of U.S.'s Domestic Energy Supply
Posted By:  - 12/14/11

Riddle: Every year the consumption of me goes up. No more of me is created. And yet every year the supply of me increases. What am I?

Solution: The recoverable supplies of oil, natural gas, and coal in the United States.

Ok, so it wasn’t the greatest of riddles, but it highlights an interesting point – thanks to new innovations in exploration and production technology, America’s bounty of domestic energy continues to increase.

A new report released by the Institute for Energy Research reveals the extent of America’s natural riches. North America has 1.79 trillion barrels of recoverable oil – almost twice as much as the combined reserves of OPEC nations! We also have 4.244 quadrillion cubic feet of natural gas – enough to provide the U.S. with electricity for 575 years at current rates.  

Despite these gaudy numbers, the Obama Administration continues to make the misleading claim that America’s consumption far outstrips its available resources. Indeed, Obama said earlier this year, “The problem is we only have about 2 to 3 percent of the world’s oil reserves.”

The trick is all in the semantics. As the IER report reveals,

“Proved reserves represent quantities of oil that are known to exist in places where development is already occurring at current economic prices. . . These figures do not, however, account for the massive quantities of oil that exist in areas where development is not permitted to take place or where new technology will add to the reserve base.”

And under Obama, the areas where development is permitted is tiny. Current regulatory barriers only permit production on less than 6 percent of federal lands onshore and 2.2 percent offshore.

The misinformation about the size and scope of America’s energy riches has provided ammunition for lawmakers to argue the need for taxpayer funding for “green” energy. Over the past three years federal subsidies for oil and natural gas has totaled $2.8 billion. By comparison, renewable energy subsidies have nearly tripled, going from $5.1 billion to $14.7 billion. The discrepancy becomes even more apparent when you consider their share of the total energy pie. For instance, solar energy receives more than $775 in taxpayer subsidies per megawatt hour of energy created, while oil and natural gas receive $0.64 per megawatt hour.  

Rather than continue to throw good money after bad in trying to prop up green energy programs, Washington should be taking steps to removing the regulatory roadblocks from utilizing the unmatched domestic oil and natural gas resources available. After all, it’s not some unbreakable riddle, it’s just common sense.


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Best Line of the Day
Posted By:  - 11/28/11

In discussing the EPA's attempts to increase average vehicle fuel economy, the Journal editorial board has this great line:  "Yes, 13 automakers agreed to this standard in July, confirming behavioral science on hostages."

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America Needs Keystone Pipeline, Not Keystone Kops
Posted By:  - 11/11/11

Rather than move forward with the Keystone XL pipeline – a project that would provide hundreds of thousands jobs (and barrels of oil) – President Obama has turned into a Keystone Kop.

The Keystone Kops were a set of incompetent, fictional policemen that starred in silent film comedies in the 20th century. Their slapstick humor had them constantly running feverishly in conflicting directions, clumsily destroying anything in their path, grasping their bowler caps in consternation, and generally looking confused. Which pretty much sums up the Obama Administration’s response to the Keystone XL pipeline – unsure of what to do and how to do it.

Rather than move forward with the project, which was first proposed in 2008, but has been needlessly stuck in the permitting process, the Obama Administration decided to do what it always does when facing a difficult decision – punt. Yesterday, the Administration announced it was going to review the route of the pipeline, effectively delaying any decision until after the 2012 election.

The decision seems questionable in light of the regulatory hoops that have already been jumped through to ensure the environmental safety of the project.  As reported by Bloomberg, “The State Department said its new study will supplement an environmental impact statement issued in August that found Keystone XL would cause “no significant” environmental damage provided that TransCanada complies with U.S. law.”

Indeed, the impact statement states that, the “DOS [Department of State] determined that incorporation of the Special Conditions would result in a Project that would have a degree of safety greater than any typically constructed domestic oil pipeline system under current regulations.”

Given the timing of the delay and the questionable basis, some have questioned whether the delay is purely political. By punting the President avoids having to make a decision that would have angered one of his core political constituencies, regardless of the position he took. Support the pipeline and risk the (misplaced) ire of the environmentalists, reject it and lose support from labor unions who realized the pipelines’ job-creating potential.

But while the political calculus was complicated, the economic math was simple – Keystone Pipeline = Jobs + Secure Energy Source.

With the economic recovery continuing to sputter along at stall speed, it is sad that narrow political interests could derail a project with the potential to create thousands of jobs right away.

With nearly 1,000 business in 47 states already providing services to the development of Canadian oil sands (which the pipeline will carry to U.S. refineries), the U.S. is already intimately tied to their success. And yet, in true Keystone Kop fashion, we may have just shot ourselves in the foot. Following announcement of the postponement, the pipeline’s developer said, “If we have to delay too long, this project will not be viable.”

Construction of the Keystone XL, and the development of Canadian oil sands that it would spur, would be a tremendous boon to our economy, both in terms of jobs and a secure supply of oil. But rather than do the obvious thing – the Obama Administration is furiously running around, spinning its wheels, creating more problems than its solving. America needs the Keystone pipeline, not a return of the Keystone Kops.  

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Energy Exploration Should Be a Centerpiece of Obama's Jobs Agenda
Posted By:  - 09/08/11

The President is gearing up for yet another jobs speech, the latest attempt to show that this iteration of the mythical “jobs pivot” is for real. Sadly, if we had a job every time Obama gave a jobs speech, why, we’d be pretty close to full employment by now.

Rather than continue talk Americans to death, NTU has been advocating a number of actions Obama could take to breathe some life into our stagnant economy. One of the most important things is to allow companies to responsibly search for and develop domestic energy sources.

For years, the federal government has kept vast amounts of energy under the lock and key of an exploration moratorium, or its more modern, but no less nefarious cousin, the “permitorium” whereby development is ground to a halt through bureaucratic pigheadedness rather than statutory barriers.

Already this year the House of Representatives has passed several pieces of legislation aimed at putting an end to the governmental obstructionism that is forcing rigs to leave our waters, energy exploration to slow, and investment to flow to other countries. Sadly, each of these bills has languished in the Democrat-held Senate where most of them have not even been brought to a vote.

Tonight’s jobs speech presents yet another chance for President Obama to wake up to the fact that improving the efficiency and rate of permitting activity could rev our idle jobs engine. In anticipation of Obama’s supposed plan, a group of 18 organizations have put together a coalition letter urging him to consider the positive economic impacts of safe and reliable domestic energy.

Here’s an excerpt and the full letter can be found at the link below,

“According to a recent study from some of the leading energy economists in the world - IHS Global Insight and IHS CERA - increased exploration and production activities in the Gulf would create 230,000 jobs, increase US gross domestic product by more than $44 billion, and contribute some 400,000 barrels per day of oil production towards US energy independence

. . . Therefore, we urge you to make responsible and effective exploration and development of energy resources in the Gulf of Mexico and elsewhere a centerpiece of your jobs agenda.”

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Global Warming: Public Choice Problems and Perverse Incentives
Posted By:  - 08/04/11

A guest post by Zebulen Riley:

Recent high temperatures have global warming activists confusing weather and climate. Americans must keep their cool during this heat wave, rather than melt down in the face of pressure from advocates for sweeping climate change policies.  These self-styled defenders of the ecosystem demand heavy government intervention in the economy to mitigate rising global temperatures and sea levels, and, of course, to save the polar bears.  However, simple economic analysis reveals that it is unreasonable to believe government capable of solving any kind of climate crisis.  

Public choice theory shows that regardless of whether the activists are right or wrong about the science of climate change, they’re dangerously wrong about how to approach it. Public choice economics extends the behavioral assumptions of economics to government.  That is, just as economists assume that people engage in rational, self-interested behavior in daily market transactions, public choice theory assumes politicians and bureaucrats engage in rational, self-interested behavior in political decision-making.  To assume that people become entirely selfless promoters of the public good upon entering politics is fitting for a 7th grade civics textbook, but not for real life.  Of course, the goal of serving the people can motivate some to become involved in government, but politicians who advocate heavy regulation to combat global warming act in self-interested ways, just like everyone else.

When citizens feel guilty about their environmental footprint and buys carbon offsets to ease their conscience, a former vice president cashes in at the bank. When a wind farm was built off the coast of beautiful Nantucket Sound, destroying the view from his living room, a late Massachusetts Senator cried foul.  And when scrubbers were mandated for companies burning “dirty coal,” a late Senator from the state that produced the supposedly offensive dirty coal required scrubbers be used in states that burned cleaner coal in the first place.  Self-interested behavior in Washington perfectly illustrates the attitude toward combating climate change: It’s great as long as I’m reaping the benefits and avoiding the costs.  Because legislators have an incentive to shift the cost of fighting global warming to citizens outside their constituency, environmental regulations are imposed where they are most politically effective, not environmentally effective.  With thousands of legislators and bureaucrats, each trying to cost-shift onto the other, there is little reason to believe government action will be efficient in reducing the United States’ environmental footprint (whatever size it may be).

Cost-shifting occurs internationally as well.  Just like hypocritical senators love wind farms in someone else’s backyard, nations that would suffer serious financial cost to combat global warming prefer that other countries wreck their own economies instead.  Just as it is in an individual’s self-interest to shift the cost of environmental regulation onto others, it is in a nation’s self-interest to free ride on the costly efforts of other nations.  When the United States reduces its pollution, the rest of the world benefits at U.S. expense.  Thus, there is an incentive for the rest of the world to do nothing and “free ride” off the U.S.  Without legally enforceable anti-pollution contracts between every country (a dubious proposition), a free rider problem will always exist when trying to mitigate global climate change.

If average temperatures are indeed on the rise, a single country taking unilateral action will be insufficient to bring an end to global warming.  Because environmental regulations are most politically supported when the beneficiaries of those regulations don’t bear the costs, politicians and voters will always try to shift the regulatory costs to others.  Regulations, thus, are designed to be politically effective, not environmentally effective.  And without legally enforceable contracts between every country, too few nations would contemplate the radical environmental and energy policies to reduce global temperatures, and trillions of dollars worth of economic resources will be wasted for naught.

No serious climate scientist argues that unless urgent action is taken Earth will spontaneously combust from rising temperatures.  Most peer reviewed studies project mild warming over the next century.  Rather than losing our cool and spending trillions of dollars on the cause of “fighting global warming,” Americans would do better to acknowledge government’s inability to meaningfully affect world temperatures and recognize the perverse international incentives that make the dream of reversing global warming a near-impossible feat.


Zebulen Riley is an associate policy analyst with the National Taxpayers Union Foundation.

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More “Toxic” Research at EPA?
Posted By: Pete Sepp - 07/08/11

As these pages have long depicted, excessive government paperwork and overbearing regulations can cost taxpayers and consumers dearly, sometimes doing as much damage as high taxes, pork-barrel spending, or reckless borrowing.

A report from NTU last month focused on the significant economic costs that the Environmental Protection Agency’s regulations, including a revised ozone standard, would impose on the American economy. The author of our assessment, Dr. David Montgomery, called out EPA officials for statements implying that the Clean Air Act alone will deliver $2 trillion of benefits in the year 2020 – when Gross Domestic Product is expected to reach $20 trillion (!).

So it was with little surprise (but lots of concern) that we learned of a new controversy surrounding EPA’s research. Last week Senators David Vitter (R-LA) and James Inhofe (R-OK) sent an exhaustive 11-page letter to the EPA’s Lisa Jackson questioning scientific methods used by her agency in issuing risk assessments, following deficiencies identified by the National Academy of Science (NAS) in their review of EPA’s draft risk assessment for formaldehyde. 

The Senators raise the valid point that the fundamental problems raised by NAS warrant reconsideration of all EPA risk assessments that use the same methods, including the agency’s ongoing revision to its National Ambient Air Quality Standards (NAAQs) for ozone, which is due to be released later this month. 

Here is an excerpt from that letter (HT: Sens. Vitter and Inhofe for sharing):

Dear Administrator Jackson:

On June 15, 2011, you testified before the Senate Environment and Public Works Committee. At that hearing, we emphasized the serious nature of the scientific concerns raised by the National Academy of Sciences (NAS) in its recent critique of EPA’s draft risk assessment for formaldehyde, Review of the Environmental Protection Agency’s Draft IRIS Assessment of Formaldehyde (“NAS Formaldehyde Report”). The NAS report highlights that for over a decade EPA has continued to err in its risk assessments from issues such as a lack of information regarding study selection criteria, inconsistent methods for evaluating the strengths and weaknesses of studies, and the lack of a clear framework for evaluating the weight of evidence for establishing what causes adverse health effects. These problems have persisted despite numerous attempts by the NAS, National Research Council (NRC), and members of Congress to compel change. [Click HERE to read the rest of the letter]

Back in 2008, when a different (but likewise draconian) expansion of NAAQS was under deliberation, NTU warned in an official comment filing that that “not all of government’s burdens come from taxes, fees, expenditures, and debts. Regulatory mandates … can be every bit as destructive as more overt fiscal policies.” Apparently toxic history can repeat itself.

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Ethanol Less Popular Than on Tuesday
Posted By:  - 06/16/11

On Tuesday, the Senate voted against considering an amendment by Oklahoma Senator Tom Coburn that would have eliminated the 45-cent-a-gallon blender tax credit.  That was then, this is now.  Today, the Senate has approved an amendment sponsored by California Senator Diane Feinstein that would end the tax credit and lift the tariff that limits the importation of foreign ethanol, according to The Hill.  Ethanol is an artificial industry that has lasted for decades thanks to its supporters inside the Beltway.  For today, at least, the opponents of King Corn have won.  Tomorrow, as they say, is another day.

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Ethanol Still Popular on Capitol Hill
Posted By:  - 06/14/11

An editorial in today's Wall Street Journal highlights a report from the UN that expresses concerns about foodstocks being converted to ethanol and Senator Tom Coburn's efforts to end ethanol subsidies.  According to CNN, that effort failed this afternoon.  So, despite opposition at the UN, ethanol remains popular inside the Beltway.

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Lamborn Shines Light of Free Markets into Washington's Cloudy Energy Policy
Posted By:  - 06/13/11

Like a solar cell, on a perpetually gloomy day, so-called “alternative technologies” have consistently failed to deliver on their energy promise. What nobody seems to realize is that it is the cloud of the federal government that has been blocking out the sun.

Federal support for alternative energy technologies is not new. Beginning with President Ford’s 1975 energy act, Washington has pushed for energy independence through innovations in new technologies. The implication behind Washington’s interventionist motives was that there was some market failure preventing the search and commercialization of novel energy technologies. So the federal government donned its cape, put on its tights, and ran to the rescue.

Sadly, our government has no real superpowers, so it did what it always does – throws vast amounts of taxpayer money at the problem. Time and again, Washington engaged in highly publicized, heavily funded, and extremely dubious forays into the development of some technology. And time and again they failed.

Take the story of ethanol, one of the government’s biggest crusades, and also one of its biggest flops. Currently the federal government mandates the use of nearly 14 billion gallons of renewable fuels, imposes a stiff tariff on the importation of foreign ethanol to protect against competition, and then provides billion in subsidies to boot! So the government has not only artificially created a market, but does its best to make it “profitable,” and still subsidizes it with refundable tax credits. All the while, taxpayers are forced to pay the bill in higher taxes and fuel costs.

Fortunately, some members of Congress are doing their best to end the taxpayer-funded lifelines to bad alternative energy investments. Representative Doug Lamborn (D-CO), who has won NTU’s Taxpayers Friend Award for four straight years, is leading the charge. Recently, Rep. Lamborn sent a letter to the Subcommittee on Energy and Water Development, urging them to cut spending on the Department of Energy’s “Energy Efficiency and Renewable Energy” programs.

“If it is truly the case that this research is revolutionary investors should be eager to invest in this technology; if it is so promising, there should be no end of private capital competing to enlist researchers and secure a piece of this new energy cornucopia.”

Rep. Lamborn should be praised, not only for his staunch defense of taxpayers’ wallets, but for his brave refusal to bend to special interests. Despite pushback from his own district, Rep. Lamborn realizes the risk that all taxpayers will face if our deficit continues to spiral out of control. “In these tight budgetary times,” says Lamborn, “taxpayers should not be subsidizing work that should be done with private investment dollars. I believe the free markets are better suited to make business decisions than the federal government.”

By picking winners and losers in the energy marketplace, often well before they have been technologically or economically proven, Washington is doing renewable technologies (not to mention taxpayers) an enormous disservice. To achieve the biggest gains, free markets must be allowed to channel resources toward technologies based on their promise of cleaner, cheaper fuels, not on political pressure. Not only will this spur the innovations we’ve long been searching for, but it will ensure that taxpayers are able to reap the rewards,  without bearing the cost of questionable investment.

NTU thanks Representative Lamborn and the other House members who continue to stick up for the American taxpayer. They’re consistent defense of free market solutions provides hope that the dark cloud of government will eventually give way to the sunlight of innovation.

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